Please ensure Javascript is enabled for purposes of website accessibility

3 Things a Small Business Can Do to Retain Employees

By Daniel B. Kline – Aug 24, 2019 at 2:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In a competitive job market, it's important for small business management to be proactive.

With the economy strong and a lot of companies looking for help, workers have more options than they otherwise would. That can create problems for small businesses, which may not be able to match the pay or perks at bigger firms.

But just because big companies might offer your employees a raise does not mean you can't compete. As a small business owner, you need to be creative and figure out what you can offer that the big boys may not be willing or able to match. Here are three ideas.

Two workers are in a clothing store.

Be creative and flexible with how you manage your employees. Image source: Getty Images.

1. Offer flexibility

As a small business, you don't have to lock employees into a traditional schedule. Maybe one worker needs to schedule around a school bus pickup and drop-off, while another likes to work longer days in order to leave early on Friday.

Be open to your employees figuring out schedules that meet your needs but give them the hours they want. That may not look like a traditional schedule, but there's no reason to worry if everyone is happy and the work gets done.

2. Offer profit sharing

You may not be able to commit to salaries that are as big as what larger companies offer. But you can offer to cut your key employees in on a piece of the profits.

Doing this requires being transparent and giving at least some employees a look at your books. Give your most-valuable workers a piece of the profits and they'll stop thinking like employees and start acting like owners. This can lead to your small business operating more efficiently because top performers now have an incentive to maximize profits.

3. Offer an ownership path

As a small business owner or manager, you understand the appeal of not having a boss. You may also want to someday move on and have no logical heir apparent.

If that's the case, then consider making a succession deal with one or more of your key employees. That may include the worker (or workers) earning equity based on hitting performance goals and/or granting the right to make the first offer to buy the company when it's time for you to step away.

This isn't a small step, but it can be a powerful one. Making a deal where an employee eventually buys the company locks that worker in and serves as your exit strategy from the business.

Be clever

The CEO of a large company can't talk to every employee and create a strategy just for them. In a smaller business, you have the luxury of being able to get to know your workers and figure out what their hopes and dreams are.

Take the time to do that. Talk to each person and work to create a unique situation that makes every individual as happy as possible. Be proactive. Don't wait until your employees tell you they are leaving. Be aggressive when it comes to creating a positive workplace culture that at least makes people think long and hard about leaving.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.